Two-thirds of stablecoin activity happens on DeFi platforms.
Crypto exchange Coinbase has pushed back against claims that the rise of stablecoins could drain deposits from US banks or undermine traditional lending.
Key Takeaways:
- Coinbase says stablecoins don’t threaten US banks, arguing most demand comes from international users seeking dollar exposure.
- Two-thirds of stablecoin activity happens on DeFi platforms.
- Stablecoins strengthen, not weaken, the US dollar’s global role.
In a market report published Wednesday, Fariyar Shirzad, director of policy at Coinbase, stated that “stablecoins are transforming the banking sector.”
“Most of the demand for stablecoins comes from outside the United States and is expanding the dollar’s dominance globally, without competing with local banks,” Shirzad said. He added that these concerns reflect unfounded fears that arose during early financial innovations, such as money market funds.
Demand for stablecoins driven by global markets
According to Coinbase, most stablecoin users are international investors seeking access to the US dollar, not local savers.
In countries with currency devaluations or limited access to banking, dollar-pegged stablecoins can serve as a lifeline for banks with a weak presence, providing stability and facilitating international trade.
The report revealed that approximately two-thirds of all stablecoin transactions take place on decentralized finance (DeFi) and blockchain platforms, which operate independently of traditional banking.
“They are a new financial channel parallel to the national banking system, but operating largely outside of it,” the company stated.
Sherzad emphasized that viewing stablecoins as a threat “is a misinterpretation of the situation,” arguing that they strengthen the dollar’s global role rather than challenge it.
The company noted that U.S. policymakers should see stablecoins as a strategic tool for dollar expansion, not as a threat to community banks or depositors.
“Community banks and stablecoin holders rarely overlap,” Sherzad stated. “In fact, banks can enhance their services with stablecoins.”
Coinbase also pushed back against claims that trillions in stablecoin assets would flow out of US bank deposits, noting that any future growth would likely remain foreign-held or locked in digital settlement systems.
Even if global stablecoin circulation reached $5 trillion, Coinbase estimates the majority would sit outside the US, with little effect on domestic deposits, which currently exceed $18 trillion.
The firm argues that, if anything, stablecoins will extend US monetary influence while giving American financial firms a competitive edge in the digital asset economy.
The defense comes as more banks explore stablecoin products following the passage of the GENIUS Act, the US regulatory framework governing stablecoin issuers and payment systems.
Western Union to Launch Dollar-Backed Stablecoin on Solana
Western Union is also entering the stablecoin market with plans to launch the US Dollar Payment Token (USDPT) on the Solana blockchain in the first half of 2026.
The token, issued by Anchorage Digital Bank, will allow users to move money globally with lower fees and faster settlement times, reducing reliance on traditional banking intermediaries and volatile currency conversions.
CEO Devin McGranahan described the move as a continuation of Western Union’s 175-year mission to simplify money transfers, this time through blockchain technology.
He said Solana was chosen for its speed, scalability, and low-cost transactions, which are crucial for the company’s high-volume remittance business.
By leveraging blockchain rails, Western Union aims to make remittances nearly instantaneous and more transparent.